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With Its 'Net Neutrality' Case Against Verizon, The FCC Loses--Again

Harold Furchtgott-Roth

If the term “network neutrality” evokes little more in your imagination than a Swiss railroad, you are probably well-informed American consumer. That is to say, network neutrality is not something you worry about.

On January 14, a unanimous 3-judge panel of the DC Circuit Court of Appeals decided the obvious: the Federal Communications Commission, despite its best efforts, does not have the legal authority to write certain rules governing the management of data on the Internet. These rules are popularly known inside the Beltway as “network neutrality” rules. To hear some observers in Washington—but nowhere else—the world has come to an end.

Judges are fair-minded people, and they are particularly fair-minded with respect to the federal government. Not surprisingly, federal judges lean over backwards to accommodate federal agencies. A close decision will likely favor the federal agency. When the agency is almost certainly wrong, many judges will remand an item back to the agency to reconsider a decision and avoid the embarrassment of a complete defeat.

The judges of the DC Circuit court apparently could not find much to support the FCC’s network neutrality rules. Federal communications law certainly did not help. The FCC was not almost certainly wrong; it was simply certainly wrong. A complete defeat resulted.

Remarkably, this is not the FCC’s first defeat on network neutrality rules. The FCC lost in the same court on similar rules a few years ago. Although tutored in the court’s thinking as well as having years to prepare a better case, the FCC lost again. No amount of judicial forbearance could save the FCC from repeating its own mistakes.

Is the FCC’s defeat the end of Internet if not the end of the world? Hardly.

For the better part of the decade, “network neutrality” has been the cause celebre of a small but vocal group of academics and consumer advocates. Bad things will happen on the Internet, or so the advocates claimed, unless the federal government steps into regulate information management on the internet. The FCC was only too eager to oblige.

There was just one glaring factual problem: there was no visible harm on the Internet of the sort that the network neutrality rules were intended to cure. Consumers were not being injured in ways that the American public would rally around.

Of course, an isolated problem here and there emerged. But it is difficult if not impossible to galvanize consumer outrage when most consumers see an Internet with ever increasing speeds and capabilities at lower prices, and where competition in most metropolitan areas is intense. If there were something wrong with a consumer’s Internet provider, a competitor or two is eagerly awaiting.

For much of the past decade, network neutrality rules have been a cause in search of a problem, a movement in search of a poster child. Neither a problem nor a poster child was to be found.

It might not matter if the overturned rules had had no binding effect. But the network neutrality intimidated many Internet service providers. Fearful of FCC challenges, the providers became unnecessarily cautious about providing new and innovative services and offerings. Fewer innovative services only harmed consumers. In the name of protecting consumers, the FCC’s network neutrality rules almost certainly did consumers more harm than good.

Although the court’s reversal of the FCC network neutrality rules has received much media attention, it is difficult to find anyone who is surprised. Lawyers and investment analysts, FCC lobbyists and FCC staff, and the waiting staff at many restaurants in Washington where the case was endlessly discussed–seemingly everyone knew the FCC was going to lose this case long before it was argued. The issue was never whether the FCC would win; the issue was how badly it would lose. As it turns out, it lost very badly.

FCC Chairman Tom Wheeler asserts that he is considering options including a legal appeal. That would be a mistake. The albatross known as network neutrality was not of his making. He inherited it. He should not hang it around his neck and claim it as his own. Rather he should cut his losses now and escape the albatross. He should fight battles that can be won, not seek battles that can only be lost. He should seek battles that actually matter to the American public, not those that matter to no one.

And if anyone should bother to ask him about what happened to the “network neutrality” issue, Chairman Wheeler should simply smile and say: “That problem was solved a long time ago. I understand that trains on the Swiss rail lines run efficiently and on time.” That is more than can be said for federal agencies in Washington.

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